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Wednesday, 17 February 2016 00:00 - - {{hitsCtrl.values.hits}}
Reuters: Gold stretched its losses into a third session and tumbled below $1,200 an ounce on Tuesday, as easing concerns over the global economy buoyed stocks and hurt safe-haven demand for the metal.
Bullion’s three-day loss of more than 4%, its biggest such drop in seven months, takes the precious metal further away from a one-year high reached last week and threatens to undo a rally that has seen prices gain 13% so far this year.
Goldman Sachs’s recommendation to short gold, prompted by the bank’s belief that the recent fear-induced rally has been overdone, added to the bearish sentiment in the market.
Spot gold fell 1.5% to $1,191.40 an ounce by 0415 GMT, after earlier hitting a session low of $1,190.40. The metal slid 2.3% on Monday, its biggest slump since July.
“The (precious metals) complex has benefited from the recent global risk-off attitude and heightened volatility. However, a pull-back was inevitable at some stage,” MKS Group trader James Gardiner said.
US gold futures also fell, hitting a session low of $1,191.50. Silver dropped more than 1%.
Spot gold may fall more to $1,178, Reuters technical analyst Wang Tao said.
A correction in gold prices had been expected as the metal had risen quickly over a short period of time. It gained $200 from its January lows to its year-high last week, when it also posted its best week since 2011.
On Thursday, gold hit a year-high of $1,260.60 as concerns over the health of the banking sector and fears of a global slowdown prompted investors to steer clear of equities and buy safe-haven gold.
But world stocks rose sharply on Monday as China’s central bank fixed the yuan at a much stronger rate and oil cemented recent gains, easing fears of global deflation.
Asian shares extended their gains on Tuesday on a combination of stabilising Chinese markets, a rebound in oil prices and solid U.S. consumption data.
